What are Intel and TSMC up to?

February 27, 2009: 3:51 PM ET

The world's two largest creators of computer chips are cooking something up together.

On Monday morning, there will be a chip industry summit of sorts: Intel, the world's largest chipmaker, and Taiwan Semiconductor Manufacturing Company, the world's largest chip foundry, will make a strategic announcement at Intel headquarters in Santa Clara. According to Intel (INTC) PR, the execs on hand will be Intel mobility chief Anand Chandrashekar and sales chief Sean Maloney, and TSMC (TSM) CEO Rick Tsai and sales chief Jason Chen.

What are they up to?

They're not saying – but it's not unusual for the two to cooperate. They've been known to work together on setting industry manufacturing standards. Two years ago they announced that TSMC would make WiMax chips for Intel. Intel has also been known to outsource the production of some chipsets and other items that don't require the very latest manufacturing processes. (The companies share more than WiMax chips; Chen ran sales for Intel before he joined TSMC four years ago.)

They're also competitors. TSMC makes chips for a bevy of Intel competitors including Nvidia (NVDA) and Qualcomm (QCOM).

Given that Chandrashekar and Maloney are attending for Intel, I'm guessing this announcement might focus on mobile and WiMax-type efforts. But considering the tough times in the chip industry – Gartner yesterday said it expects chip sales to plummet by up to a third in 2009 – lots of things could be on the table.

Whatever the deal is, it's probably something TSMC needs more desperately than Intel does. With its smaller chip customers swooning, one has to imagine Tsai might cut Intel a pretty sweet deal to get any business the chip giant would like to send his way. (NVDA) (AMD) (QCOM) (AAPL) (IBM)

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